Question 1

The equation Q = 0.5KL - (0.4)L + 2L2 is an example of

Accepted Answer

A) a factor of production equation. 
B) an economic input function. 
C) a technological change equation. 
D) an arithmetic expression of output quantities. 
E) a production function. 
A) a factor of production equation. 
B) an economic input function. 
C) a technological change equation. 
D) an arithmetic expression of output quantities. 
E) a production function.

Question 2

Short-run cost curves for a firm are eventually upward-sloping because of the effects of

Accepted Answer

A) the increasing price of variable inputs. 
B) diminishing marginal product. 
C) increasing fixed costs. 
D) increasing marginal productivity of the variable inputs. 
E) decreasing total product. 
A) the increasing price of variable inputs. 
B) diminishing marginal product. 
C) increasing fixed costs. 
D) increasing marginal productivity of the variable inputs. 
E) decreasing total product.

Question 3

The table below provides information on output per month and short-run costs for a firm producing outdoor wooden lounge chairs.All costs are in dollars.
   TABLE 7-5
-Refer to Table 7-5.What is the average variable cost of producing 20 chairs?

Accepted Answer

A) $22 
B) $23 
C) $260 
D) $460 
E) $13 
A) $22 
B) $23 
C) $260 
D) $460 
E) $13

Question 4

Suppose a firm is producing 250 units of output.At this level of output,average fixed costs are $20 per unit and average variable costs are $80 per unit.It can be concluded that total cost is

Accepted Answer

A) $100. 
B) $0.40 per unit. 
C) $40 per unit. 
D) $2500. 
E) $25 000. 
A) $100. 
B) $0.40 per unit. 
C) $40 per unit. 
D) $2500. 
E) $25 000.

Question 5

A limited partnership differs from an ordinary partnership by

Accepted Answer

A) having a limited number of partners. 
B) having a limited number of partners,each with limited liability. 
C) including some partners whose liability is restricted to the amount that they invested in the firm. 
D) having limited liability of all partners. 
E) having unlimited liability for all partners. 
A) having a limited number of partners. 
B) having a limited number of partners,each with limited liability. 
C) including some partners whose liability is restricted to the amount that they invested in the firm. 
D) having limited liability of all partners. 
E) having unlimited liability for all partners.

Question 6

A single proprietorship is a form of business organization which

Accepted Answer

A) has one owner-manager who is personally responsible for the firm's actions and debts. 
B) has a single owner but has directors who are responsible for the firm's debts. 
C) has limited liability. 
D) has unlimited access to money capital. 
E) allows easy transferability of ownership by the trading of shares. 
A) has one owner-manager who is personally responsible for the firm's actions and debts. 
B) has a single owner but has directors who are responsible for the firm's debts. 
C) has limited liability. 
D) has unlimited access to money capital. 
E) allows easy transferability of ownership by the trading of shares.

Question 7

The opportunity cost of money that a firm's owner has invested in the firm is an example of

Accepted Answer

A) direct production costs. 
B) accounting costs. 
C) sunk costs. 
D) implicit costs. 
E) explicit costs. 
A) direct production costs. 
B) accounting costs. 
C) sunk costs. 
D) implicit costs. 
E) explicit costs.

Question 8

Which of the following items is part of a firm's financial capital as distinct from its real capital?

Accepted Answer

A) a new bulldozer 
B) a $500 000 balance in a bank account 
C) a network of personal computers 
D) a fleet of delivery trucks 
E) inventory of goods valued at $1 000 000 
A) a new bulldozer 
B) a $500 000 balance in a bank account 
C) a network of personal computers 
D) a fleet of delivery trucks 
E) inventory of goods valued at $1 000 000

Question 9

The following data show the total output for a firm when different amounts of labour are combined with a fixed amount of capital.Assume that the wage per unit of labour is $10 and the cost of the capital is $50.
   TABLE 7-3
-Refer to Table 7-3.The average total cost when this firm is producing zero units of output is

Accepted Answer

A) $50. 
B) $0. 
C) undefined. 
D) $1. 
E) There is not enough information to determine this. 
A) $50. 
B) $0. 
C) undefined. 
D) $1. 
E) There is not enough information to determine this.

Question 10

FIGURE 7-1
-Refer to Figure 7-1.The marginal product of labour curve intersects the average product of labour curve when

Accepted Answer

A) the firm is at its capacity. 
B) the firm achieves increasing returns. 
C) average product is at its maximum. 
D) diminishing returns sets in. 
E) total product is at its maximum. 
A) the firm is at its capacity. 
B) the firm achieves increasing returns. 
C) average product is at its maximum. 
D) diminishing returns sets in. 
E) total product is at its maximum.

Question 11

The period of time over which at least one factor of production is fixed is called the

Accepted Answer

A) very-short run. 
B) short run. 
C) long run. 
D) very-long run. 
E) immediate run. 
A) very-short run. 
B) short run. 
C) long run. 
D) very-long run. 
E) immediate run.

Question 12

Suppose a production function for a firm takes the following algebraic form: Q = (0.5)KL - 40L,where Q is the output of paintbrushes per week.Now suppose the firm is operating with 100 units of capital (K = 100)and 30 000 units of labour (L = 30 000).What is the output of paintbrushes per week?

Accepted Answer

A) 30 000 
B) 300 000 
C) 1 200 000 
D) 1 500 000 
E) 3 000 000 
A) 30 000 
B) 300 000 
C) 1 200 000 
D) 1 500 000 
E) 3 000 000

Question 13

The following data show the total output for a firm when different amounts of labour are combined with a fixed amount of capital.Assume that the wage per unit of labour is $10 and the cost of the capital is $50.
   TABLE 7-3
-Refer to Table 7-3.Diminishing marginal product of labour is first observed when the firm changes the amount of labour hired from

Accepted Answer

A) 0 to 1 units. 
B) 1 to 2 units. 
C) 2 to 3 units. 
D) 3 to 4 units. 
E) 4 to 5 units. 
A) 0 to 1 units. 
B) 1 to 2 units. 
C) 2 to 3 units. 
D) 3 to 4 units. 
E) 4 to 5 units.

Question 14

The following data show the total output for a firm when different amounts of labour are combined with a fixed amount of capital.Assume that the wage per unit of labour is $10 and the cost of the capital is $50.
   TABLE 7-3
-Refer to Table 7-3.The marginal product of labour is at its maximum when the firm changes the amount of labour hired from

Accepted Answer

A) 0 to 1 unit. 
B) 1 to 2 units. 
C) 2 to 3 units. 
D) 3 to 4 units. 
E) 4 to 5 units. 
A) 0 to 1 unit. 
B) 1 to 2 units. 
C) 2 to 3 units. 
D) 3 to 4 units. 
E) 4 to 5 units.

Question 15

The following data show the total output for a firm when specified amounts of labour are combined with a fixed amount of capital.When answering the questions,you are to assume that the wage per unit of labour is $25 and the cost of the capital is $100.
   TABLE 7-4
-Refer to Table 7-4.Marginal product of labour begins decreasing with the ________ unit of labour hired.Average product of labour begins decreasing with the ________ unit of labour hired.

Accepted Answer

A) 4th; 3rd 
B) 3rd; 2nd 
C) 2nd; 3rd 
D) 3rd; 4th 
E) 4th; 5th 
A) 4th; 3rd 
B) 3rd; 2nd 
C) 2nd; 3rd 
D) 3rd; 4th 
E) 4th; 5th

Question 16

The following data show the total output for a firm when different amounts of labour are combined with a fixed amount of capital.Assume that the wage per unit of labour is $10 and the cost of the capital is $50.
   TABLE 7-3
-Refer to Table 7-3.What is the marginal product of the 4th unit of labour hired by the firm?

Accepted Answer

A) 42 
B) 60 
C) 132 
D) 900 
E) 1320 
A) 42 
B) 60 
C) 132 
D) 900 
E) 1320

Question 17

When a firm's marginal cost is rising,we know that

Accepted Answer

A) average fixed cost must be rising. 
B) average variable cost must be rising. 
C) average total cost must be rising. 
D) marginal product must be zero. 
E) marginal product must be falling. 
A) average fixed cost must be rising. 
B) average variable cost must be rising. 
C) average total cost must be rising. 
D) marginal product must be zero. 
E) marginal product must be falling.

Question 18

The following data show the total output for a firm when specified amounts of labour are combined with a fixed amount of capital.When answering the questions,you are to assume that the wage per unit of labour is $25 and the cost of the capital is $100.
   TABLE 7-4
-Refer to Table 7-4.The marginal product of labour is at its maximum when the firm changes the amount of labour hired from

Accepted Answer

A) 0 to 1 unit. 
B) 1 to 2 units. 
C) 2 to 3 units. 
D) 3 to 4 units. 
E) 4 to 5 units. 
A) 0 to 1 unit. 
B) 1 to 2 units. 
C) 2 to 3 units. 
D) 3 to 4 units. 
E) 4 to 5 units.

Question 19

The following data show the total output for a firm when different amounts of labour are combined with a fixed amount of capital.Assume that the wage per unit of labour is $10 and the cost of the capital is $50.
   TABLE 7-3
-Refer to Table 7-3.If this firm is producing 20 units of output per period its marginal cost is

Accepted Answer

A) $1.00. 
B) 50 cents. 
C) $1.67. 
D) 16.7 cents. 
E) $10.00. 
A) $1.00. 
B) 50 cents. 
C) $1.67. 
D) 16.7 cents. 
E) $10.00.

Question 20

The following data show the total output for a firm when specified amounts of labour are combined with a fixed amount of capital.When answering the questions,you are to assume that the wage per unit of labour is $25 and the cost of the capital is $100.
   TABLE 7-4
-Refer to Table 7-4.Average variable costs for 175 units of output is approximately

Accepted Answer

A) 25 cents. 
B) 32 cents. 
C) 43 cents. 
D) 57 cents. 
E) $1.00. 
A) 25 cents. 
B) 32 cents. 
C) 43 cents. 
D) 57 cents. 
E) $1.00.

Exam 7: Producers in the Short Run

The equation Q = 0.5KL - (0.4)L + 2L2 is an example of

Short-run cost curves for a firm are eventually upward-sloping because of the effects of

The table below provides information on output per month and short-run costs for a firm producing outdoor wooden lounge chairs.All costs are in dollars. TABLE 7-5 -Refer to Table 7-5.What is the average variable cost of producing 20 chairs?

Suppose a firm is producing 250 units of output.At this level of output,average fixed costs are $20 per unit and average variable costs are $80 per unit.It can be concluded that total cost is

A limited partnership differs from an ordinary partnership by

A single proprietorship is a form of business organization which

The opportunity cost of money that a firm's owner has invested in the firm is an example of

Which of the following items is part of a firm's financial capital as distinct from its real capital?

FIGURE 7-1 -Refer to Figure 7-1.The marginal product of labour curve intersects the average product of labour curve when

The period of time over which at least one factor of production is fixed is called the

Suppose a production function for a firm takes the following algebraic form: Q = (0.5)KL - 40L,where Q is the output of paintbrushes per week.Now suppose the firm is operating with 100 units of capital (K = 100)and 30 000 units of labour (L = 30 000).What is the output of paintbrushes per week?

When a firm's marginal cost is rising,we know that

Economic Issues and Concepts

Economic Theories,Data,and Graphs

Demand, Supply, and Price

Elasticity

Price Controls and Market Efficiency

Consumer Behaviour

Producers in the Long Run

Competitive Markets

Monopoly, cartels, and Price Discrimination

Imperfect Competition and Strategic Behaviour

Economic Efficiency and Public Policy

How Factor Markets Work

Labour Markets and Income Inequality

Interest Rates and the Capital Market

Market Failures and Government Intervention

The Economics of Environmental Protection

Taxation and Public Expenditure

What Macroeconomics Is All About

The Measurement of National Income

The Simplest Short-Run Macro Model

Adding Government and Trade to the Simple Macro Model

Output and Prices in the Short Run

From the Short Run to the Long Run: The Adjustment of Factor Prices

Long-Run Economic Growth

Money and Banking

Money, Interest Rates, and Economic Activity

Monetary Policy in Canada

Inflation and Disinflation

Unemployment Fluctuations and the Nairu

Government Debt and Deficits

The Gains From International Trade

Trade Policy

Exchange Rates and the Balance of Payments

Filters

The equation Q = 0.5KL - (0.4)L + 2L² is an example of